Blog Misc What are Masternodes: A Quick Guide for Beginners

What are Masternodes: A Quick Guide for Beginners

date June 20, 2022 time 5 min read 169 views

More people are aware of the opportunity to earn money with masternodes, but remember that not every masternode crypto will provide a profitable return. If you want to have a deeper understanding of masternodes, welcome to our article.

Masternodes are expected to be a sign of growth and innovation in the blockchain and cryptocurrency.
Masternodes are expected to be a sign of growth and innovation in the blockchain and cryptocurrency.  (Source: Pixabay)

Masternode cryptos have shown increasing popularity in recent years, which makes more investors look for the opportunity to get a profitable return on this investment. For beginners, you may ask various questions surrounding masternodes like “what are masternode cryptos?”, “What differs masternodes from mining cryptocurrency?” or “how do masternodes work?”. Should you want to know what makes masternodes unique and how they can work for you, let’s jump into our article. 

What are masternode cryptos ?

Masternodes play an essential role in cryptocurrency networks, usually operating in parallel to regular nodes. However, unlike regular nodes, masternodes verify new blocks and perform special roles in governing the blockchain instead of adding new blocks of transactions to the blockchain.

In particular, masternodes are servers with a unique status in the network that provide exclusive services, validate instant transactions, and participate in network governance. In exchange for each service, the masternode gains rewards from fees that create a commission-like incentive structure.

Masternodes are a great source of passive income in the cryptocurrency space that can let you earn higher returns.
Masternodes are a great source of passive income in the cryptocurrency space that can let you earn higher returns. (Source: Pixabay)

Nevertheless, a masternode must lock up coins to get a master node status, which is like putting money in custody in exchange for getting your status and later the rewards. 

You may ask the reason why you must lock tokens. It is just like going to the bank asking for a loan and you must deposit collateral to ensure it in return.

Masternodes are implementations of Proof of Stake (PoS) that are used as a less energy-consuming solution to secure a network. In other ways, the more cryptos you own as collateral, the higher the chance your node has of earning fees. The Masternodes’ protocol chooses validator nodes to verify transactions based on the amount of the owned stake, which creates a trust-based solution.

Masternodes generally provide several same functions of different networks, including the responsibility of deploying network updates quickly and special rights to voting on protocol updates. Masternodes remain in sync with each other and collectively serve as a source of information for anyone who wants to interact with the network. In addition, if the blockchain network has any problem, masternodes are expected to be the first to know.

Masternode cryptos list

Masternodes are viewed as an alternative to mining, running only specific functions to support the network and receiving coins/ cryptos as a reward.
Masternodes are viewed as an alternative to mining, running only specific functions to support the network and receiving coins/ cryptos as a reward. (Source: Pixabay)

Here are the top 5 significant masternode cryptos based on market cap data as of Apr. 29, 2022  (from coinmarketcap.com)

1. ION 

ION is a decentralized gaming ecosystem that rewards players with its native coin to make mobile games interesting. Currently, the market cap of ION is over $43 billion and ION is trading at over $0.01 (June 2022). The coin peaked at $5,265.15 in April 2022 and had an all-time low of $0.002414 in August 2021.

2. Dash 

Dash is the first cryptocurrency project to introduce a masternode system to its network. Launched in January 2014, Dash is an open-source blockchain and cryptocurrency focusing on providing a decentralized quick, cheap global payments network. Masternodes earn 45% of Dash block rewards in exchange for expediting additional features on the network. If you want to become a Dash masternode, the collateral requirement you must have is at least 1000 DASH coins. 

Currently, DASH has more than 1 billion dollars of market cap and it is trading at over $45 (June 2022). The coin had an all-time high of $1,642.22  in December 2017 and an all-time low of $0.2139 in February 2014.

3. SAFE 

With the aim to become the biggest secure and private digital currency payment and application platform, SAFE’s application provides different services including safe payment, safe assets, safe voting, safe game and safety consultation.

SAFE had reached the peak of $49.08 in April 2022 and had an all-time low of $0.1082 in October 2020.

4.  Horizen 

As a zero-knowledge-enabled network of blockchains, Horizen provides massive scalability and optional privacy features, which is powered by the largest node infrastructure in the industry. Also, Horizen features Zendoo – a sidechain system that supports the deployment of thousands of independent sidechains.

With a market cap of more than 390 million dollars, ZEN is currently trading at over $13 (June 2022). The highest price of ZEN was $168.15 (May 2021) and the lowest was $3.09 (July 2017).

5. Sapphire (>$340 million)

Sapphire is built to enable fast payment transfers and be easily accessible to the community. In the long term, SAPP anticipates becoming a stable means of payment in the real economy.

The market cap of Sapphire is more than 340 million dollars. SAPP is currently trading at around $ $0.655 (June 2022). The all-time high and low of SAPP are  $0.707 (April 2022) and $0.00178 (May 2020) respectively.

How to earn more with Masternodes

If you want to gain a return on investment with Masternodes, keep in mind that it depends on different factors including the network and cryptocurrency, upfront and operational costs, and price fluctuations. 

Locking up collateral to become a masternode means that rather than selling your assets, you can retain their assets by holding them. Hence, the price of an asset used as collateral drops will result in losses.

Besides, when the returns from validating transactions can cover the expenses, masternodes can be profitable. Similarly, operating a masternode can also provide other benefits.  

However, don’t forget that the cryptocurrency market is volatile, which means the value of assets held as collateral could fall significantly and you may lose earnings. Also, while this project may be innovative, it could be challenging to sell the masternode cryptos required as collateral if it is only available in thin or illiquid markets. 

Start investing with MyConstant

If you want to become a crypto investor and desire to earn from this industry, MyConstant’s P2P lending could be a great platform for you to monetize.

Our platform offers 3 powerful services:

  • Crypto loan. This option allows you to earn up to 7% APR by lending to cryptocurrency holders around the world. You can choose the term (1,3, or 6 months) depending on your time and capability.
  • Besides, you can invest your idle coins and earn interest on crypto up to 15% APY compounded and paid out every second through our Crypto-Lend feature. This can apply when you own some cryptos and haven’t planned to buy more yet.
  • Instant-access investment. When you deposit money into a MyConstant account online, an investment pool will be lent to you. You can earn 4% APY and make free withdrawals at any time without minimum investment.

Sounds interesting? Sign up for a free account today and start investing.

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George Schooling

George Schooling

Earn up to 15% APY on your idle stablecoins (USDC, USDT)

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